/ Finance 101

5 steps to household budgets that work

Spring cleaning doesn’t just apply to your overflowing closets. Your household budget can also benefit from a seasonal review. With a few easy adjustments to your financial routine, you’ll gain a greater understanding of your disposable income and enjoy the money you have on hand knowing that you are putting some away. Here are five steps to get you started on your own household budget.

1. Track everything!

Collect all of your receipts — from the grocery store, the gas station, pizza deliveries, corner store trips, everything — for a whole month in a budget journal, in a spreadsheet or on your phone. At the end of the month, total the receipts to see how much you spent per pay cheque.

2. Categorize expenses

Housing costs (rent, mortgage, utilities, etc.) can form one group; ditto for transportation (car payments, gas, repairs, insurance, bus tickets, etc.) Other things to group together might include household must-haves (groceries, phone/cable/internet) and miscellaneous expenses (sports and recreation, coffee money, entertainment etc.).

Work towards balance and moderation, and aim to spend less than 90% of your total household income."

3. Make a budget

It’s important that your budget is realistic, and takes into account your total earnings and savings goals. Work towards balance and moderation, and aim to spend less than 90% of your total household income. The rest can be split into savings and an emergency fund.

4. Deal in cash

Refer to your budget to decide how much cash you will need each week. Put this amount in cash in envelopes labelled by expense group, and try to spend that envelope’s money only on those items. Be sure to keep all your receipts to track your spending.

5. Monitor and adjust

If you have money left over at the end of the week (congrats!), transfer it to next week’s envelope or add it right into your savings. Continue to review your spending each month so that you know where you’re on track, where you’re ahead and where you can use improvement.

Building a budget can seem difficult at first, but with every step you take, you’re setting yourself up for financial success. Do you have any budgeting tips that you find helpful? Start a conversation by sharing this article with your social networks.


This article is for informational purposes only. For personalized financial advice, you should contact a qualified financial advisor.

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